From: alexhormozi
Recruiting and hiring exceptional talent is a critical function in business, often becoming the most valuable aspect of an organization as it scales [00:34:02]. While entrepreneurs initially focus on building businesses, sustained success shifts to assembling teams that build the business [00:33:56]. Top entrepreneurs like Steve Jobs, Jeff Bezos, Bill Gates, Elon Musk, and Mark Zuckerberg consistently emphasize the importance of talent [00:23:40].
The Value of Talent
The speaker emphasizes that the best talent is always in the future, meaning there’s always potential to upgrade your team [00:23:09]. Businesses can significantly increase their profitability by having more “studs” (exceptional individuals) on their team [00:23:29]. Focusing attention on acquiring more of these high-performing individuals is paramount [00:23:35].
When the right people are in place, a business is potentially “one hire away from somebody who’s a 100 times smarter than you who’s done this way longer than you have who can help you grow the business” [00:24:03]. The growth of a business is directly related to the number and intelligence of the brains within the organization [00:28:07].
The “Who” Over the “What” or “How”
As a business matures, the focus shifts from “what” to do or “how” to do it, to “who” can execute the tasks [00:23:59]. The more skilled an individual, the more vague the direction can be [01:03:51]. This efficiency in communication is a key benefit of hiring smart people [01:04:40].
Identifying Problems in Talent and Standards
A telltale sign of a weak team or low standards is the need for “stupid rules” [00:26:07]. If an organization needs rules like “everybody you have to show up on time” or “don’t drink while you’re on the job,” it often indicates that standards are too low and unsuitable people are being hired [00:26:53].
The Peter Principle and Internal Promotions
A common pitfall is the Peter Principle, where individuals are promoted to their level of incompetence [00:31:38]. For example, a good salesperson promoted to sales manager may fail because they lack management experience [00:31:44]. This results in losing a good individual contributor and gaining a bad manager [00:31:51]. Businesses often retain underperforming individuals due to positive past associations or a reluctance to have difficult conversations [00:32:07].
“The money that you want to make is on the other side of a few hard conversations” [00:29:54].
These conversations involve either redefining roles, moving people aside, or letting them go [00:32:31]. While difficult, accepting mediocrity at a bottleneck point will hinder growth [00:29:59].
Strategies for Better Hiring and Talent Management
Raising the Bar
A key rule for talent management, popularized by Amazon, is that “every person you hire you want to raise the average bar of the team that they’re getting hired into” [00:27:04]. Without this rule, companies tend to dilute talent, as people often hire those they don’t feel threatened by [00:27:28]. Conversely, consistently raising the bar leads to a team that continually gets better and smarter, driving company growth [00:27:48].
It is better to hire someone with 10 years of experience in a function (e.g., customer success) so the business can start on “year 10” of that function’s expertise, learning from someone else’s prior investment and mistakes [00:28:52].
Interviewing and Assessing Talent
To identify quality talent, especially without prior experience in a specific role, one strategy is to interview a large number of candidates [00:17:06]. This process serves as an education, allowing the interviewer to learn about the role and establish a basis for judgment [00:17:11]. For example, a co-founder interviewed 600 developers before finding the right co-founder [00:17:31].
When assessing candidates, focus on:
- Quantity and Quality of Metrics: Ask candidates what metrics they measure to describe their role and drive outcomes [00:18:22]. Someone who can’t define an outcome or struggles to name relevant metrics likely can’t drive the desired results [00:18:58].
- Tying Role to Revenue/Profit: Ask “How does what you do make the business money?” [00:19:55] Every function in a business should contribute to revenue or profit, directly or indirectly [00:20:06]. If a candidate cannot clearly articulate this, they likely don’t understand how their role impacts the business’s bottom line [00:22:10].
Investing in Talent
Talent represents a significant arbitrage opportunity in business [00:34:47]. Paying higher wages for exceptional talent yields disproportionately higher returns. An A+ player can deliver 5x to 10x the output of a B player, making them a much more efficient investment despite higher costs [00:35:28]. This is particularly true in “knowledge work” where intellect drives significant results [00:35:47].
Investing in talent means being willing to pay more to gain years of experience and accelerate growth [00:36:09]. The returns on talent investment can increase with the level of talent hired [01:22:04].
Aligning Mission with Talent Attraction
To attract top-tier talent, a company’s mission must align with what potential employees find meaningful [01:18:17]. Companies with impactful, world-saving missions (like many of Elon Musk’s ventures) naturally attract highly driven individuals willing to work hard [01:20:09].
The Founder’s Role in Scaling Teams
Businesses often grow to the constraint of the founder’s own skills and comfort zones [01:08:41]. To overcome this, founders must break their own limiting beliefs about what’s possible in scaling. An example is a billionaire entrepreneur who conducted 200 interviews in seven days to build a new fund’s team, demonstrating a level of execution far beyond what a junior entrepreneur might attempt [01:09:30].
At the highest levels, business fundamentally becomes about managing and leading people, as all functions (marketing, sales, product, finance, legal, tech) are executed by teams [01:51:53]. Therefore, mastering the art of leadership and management in business and building effective teams is essential for sustained growth [01:52:13].